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SEC internal probe admits failures in Madoff investigation

An internal report commissioned by the Securities and Exchange Commission in the United States determined that the "inexperience" of its staff contributed to their neglect in noticing anomalies in the activities of fraudster Bernard Madoff.

AFP - The US Securities and Exchange Commission flubbed a probe of confessed swindler Bernie Madoff, who pulled off one of the biggest frauds in Wall Street history, an internal probe showed Wednesday.

SEC Inspector General David Kotz said in a report that the probe found the commission repeatedly failed to properly investigate allegations against Madoff, citing the use of "inexperienced" staff.

"The SEC received more than ample information in the form of detailed and substantive complaints over the years to warrant a thorough and comprehensive examination and/or investigation of Bernard Madoff and BMIS for operating a Ponzi scheme, and that despite three examinations and two investigations being conducted, a thorough and competent investigation or examination was never performed," the report said.

The SEC teams assembled to investigate Madoff were "relatively inexperienced" and there was "insufficient planning" for the examinations.

The first complaint was brought to the SEC's attention in 1992.

The SEC examinations were "too narrowly focused," with "no significant attempts made" to analyze the numerous red flags about Madoff's trading and returns.

SEC chairman Mary Schapiro, in a separate statement, said the report "makes clear that the agency missed numerous opportunities to discover the fraud.

"It is a failure that we continue to regret, and one that has led us to reform in many ways how we regulate markets and protect investors," she said.

Madoff is serving a 150-year sentence in a North Carolina prison for a multi-billion dollar investment fraud that cheated thousands of people and institutions, including celebrities, charities and leading banks, over several decades.